Analysts Expect Looming Bitcoin Pullback
Bitcoin (BTC) has been on an absolute tear over the past two months. Since the fateful April 1st, we’ve seen the crypto asset explode by over 100%, pulling up altcoins and arguably catalyzing the next full-on bull rally. Cryptocurrencies have gone so far that they are actually the best-performing asset class of 2019 so far, validating a prediction made by individuals like Travis Kling. Despite the stellar performance, some have tried to stay level-headed, claiming that Bitcoin isn’t exactly ready to shoot sky high.
Magic Poop Cannon, an analyst with a very odd pseudonym that foresaw last December’s drop, recently explained his thoughts on why BTC won’t run just yet. He remarks that from his technical standpoint, Bitcoin is “getting very close to the top of this move.” And there are a number of reasons why.
This is Why I’ve Been Long in Bitcoin, But Not Bullish! – #BLX chart https://t.co/SGoYjSHYVJ — MAGIC (@MagicPoopCannon) May 29, 2019
Firstly, the Money Flow Index, an indicator meant to determine if an asset is overbought or oversold, is currently reading at 97 on Bitcoin’s one-week chart — just three points shy of the peak of the oscillator. The last time this occurred, BTC was at a “major peak”, and suffered an average correction of 85%. Indeed, the last time the MFI was this high, Bitcoin collapsed from $20,000 in the now-historic bear market of 2018. Also, the Relative Strength Index on certain time frames has also begun to read rather high.
Secondly, the Network Value to Transactions ratio (NVT) has “flashed red”. Like the MFI, whenever this ratio has reached current levels, a large correction ensued. He writes, “each time the NVT has flashed red, while coupled with a maxed out MFI reading, there was an average correction of 85.33%. A correction of that magnitude would take us down to the $1100 to $1200 range.” Scary, huh.
And lastly, historical precedent suggests that BTC still has some requirements to fulfill. Per previous reports from Ethereum World News, Bitcoin has yet to touch the bottom band of a rising logarithmic arc that Magic depicted, which BTC has always touched to kick off its next bull rally. Per his calculations, BTC could touch that arc by October, and at a price of $3,000. He notes that this will fulfill Bitcoin’s seeming requirement to touch the bottom and the top of the arc in each cycle, and would also “fulfill the linear nature of Bitcoin.”
With this, he comes to the conclusion that while $1,000 isn’t inbound for Bitcoin, he would be inclined to suggest that BTC should find itself at $3,000 by October, before rocketing higher for the long haul.
It is important to note that some have criticized Magic’s work, explaining that just months ago, he was bullish on Bitcoin’s short-term future. The thing is, in a market as dynamic as this, it is important to be just as dynamic (if not more so) in your analysis.
Anyhow, some are sure that Bitcoin still has room to run though, even in a correction is on the horizon. As we reported , analyst Filb Filb states that in 2018, 7,300 BTC worth of shorts opened on Bitfinex in the $11,600 to $13,800 level. Assuming that some of these positions have yet to close, Filb explains that as the cryptocurrency market continues to push higher, shorts will become increasingly under pressure to cover, pushing prices higher. What’s more, he expects for the “Fear of Missing Out” (FOMO) and the 0.618 Fibonacci Retracement level to act as a magnet, potentially giving Bitcoin the legs to run to the $12,000 range. With this, he concludes that “Bitcoin has enough in the tank to break $10,000”.
Title Image Courtesy of Andre Francois Mckenzie Via Unsplash
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